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Jack Dorsey: Today Starbucks Signed up for Square

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Re: Jack Dorsey: Today Starbucks Signed up for Square

#141

Post by pja »

abalone wrote: post #115

Here's what's in it for Starbucks: Square's cheaper. Square loses money on transactions below $6. The reason is for the sake of simplicity they waive the per-transaction fee that Visa/Mastercard charges them and just charge a flat percentage of 2.75%. But even though this is a relatively high percentage, it's not enough to recoup the cost of the per-transaction fee at low transaction sizes. Take a $2 coffee charged t…

"We'll lose money on every transaction, but make it up on volume!"

I'm going to optimistically assume that Square have run the numbers and this deal is worth the price though. As a marketing exercise alone it could be worth a fortune if it ends up putting Square's branding in every Starbucks.

Re: Jack Dorsey: Today Starbucks Signed up for Square

#142

Post by bonzoesc »

ry0ohki wrote: post #113
kayoone wrote: post #85

Earlier quoted context omitted.

Here in Europe (Germany) i have never seen anyone buying a coffee with a credit card. Maybe debit card, but that also is rare, its mostly cash for these small transactions. Most coffee shops dont even take any cards at all, even here in germany!

In Pittsburgh, 90% of the businesses that take Square are coffee shops for whatever reason

Using Square is easy and has low fixed costs. iPad for under $400, iPad stand for $100, and you don't have to fuck with complicated 1990s credit card processors.

Re: Jack Dorsey: Today Starbucks Signed up for Square

#143

Post by ConstantineXVI »

gojomo wrote: post #61
nasmorn wrote: post #58

Earlier quoted context omitted.

Because eventually they will want to get rid of as many humans as they can in your caffe latte experience. Or more prosaicly so that you can order a snack from a snack machine too.

If automated vending machines are the remaining hope for NFC, that's pretty weak. A geofenced app -- if not Square, then Apple Passbook or others -- could prompt me on my own device's screen: "The vending machine here requests $1.50 to dispense your Snickers. Press 'pay $1.50' or 'cancel'." The soft-interface device screen is much more flexible than the NFC-tap/wave-in-the-right-place gesture. Your own device screen…

Geofencing is a good hack, but it's still a hack:

- constant location polling is a battery drain

- GPS reliability/speed degrades quite a bit indoors (are you at Starbucks or the shop next door? What happens when another Mr. Gojomo next door orders coffee and the cashier is rushed and doesn't notice the different face?). WiFi isn't much help here either if you're in a large urban area.

You can still do all you listed starting with a NFC handshake instead of playing with GPS. Geofencing is helpful for getting payments onto existing phones (not to downplay Sq's achievement here), but NFC or another more localized technology will be necessary to make payments more reliable.

Re: Jack Dorsey: Today Starbucks Signed up for Square

#144

Post by snowwrestler »

ronaldj wrote: post #26
dm8 wrote: post #23

Earlier quoted context omitted.

Skeuomorphism can be horrible if it's not done properly!

All the cool kids are talking about skeuomorphic design lately.

It's a technical-sounding word that makes the speaker look smart when they are complaining about design.

Re: Jack Dorsey: Today Starbucks Signed up for Square

#145

Post by mikeevans »

bobsy wrote: post #53
ben1040 wrote: post #9

Earlier quoted context omitted.

One cool feature about the Square mobile app is you can set up geofenced "tabs" that automatically get opened if you get close enough to an establishment. So you keep your phone in your pocket, walk into Starbucks and order a drink as you do every morning. You tell them "put it on John's tab." You get a receipt in your email immediately thereafter, and never have to pull out your phone or wallet.

Question: Yesterday I saw you in Starbucks and heard you say "put it on John's tab". Today I see you are 2 behind me in the queue. What stops me from strolling up to the counter, big grin and saying... Put it on John's tab please? Wouldn't the proximity of your phone mean they would take the payment from you even though you haven't authorized it?

Also, what if there are more than a few people with that name there? John is a very common name.

Re: Jack Dorsey: Today Starbucks Signed up for Square

#146

Post by archangelzx »

jusben1369 wrote: post #120
abalone wrote: post #119

Earlier quoted context omitted.

Maybe, but they wouldn't need to for the deal to be attractive. Square's regular rate is already below wholesale processing for small transactions.

The largest retailers though can negotiate less than wholesale. But you raise a point. What attracted SB's to the deal? Lower transaction fees or incremental sales due to a simplified paying process? It can be both but it's probably not 50/50. I suspect one was the driver and the other gravy.

I'm sure part of it deals with space as well. Their registers take up a large portion of their counters. Also with a portable register they could move down the line much faster (akin to the order-takers who walk down the line at in-n-out.)

Re: Jack Dorsey: Today Starbucks Signed up for Square

#147

Post by vitek »

jusben1369 wrote: post #120
abalone wrote: post #119

Earlier quoted context omitted.

Maybe, but they wouldn't need to for the deal to be attractive. Square's regular rate is already below wholesale processing for small transactions.

The largest retailers though can negotiate less than wholesale. But you raise a point. What attracted SB's to the deal? Lower transaction fees or incremental sales due to a simplified paying process? It can be both but it's probably not 50/50. I suspect one was the driver and the other gravy.

The largest retailers can negotiate the processing (merchant acquiring fees), but not the interchange. Components of CC fees are interchange (which goes to card issuing banks), processing (which goes to the merchant's bank), and association fees (which is how visa/mc/etc make their money). Interchange & association fees are fixed, processing is the most negotiable. That said, any >$1B retailer is paying too much if they pay more than a penny/transaction in processing, so there's not much room for improvement because there are real costs in that activity.

I think there are two big reasons why they would do this: 1. Investment They will likely make a multiple of the $25M when Square IPO's. The best possible evidence of Square's traction is what Starbucks just provided. Smart investment 2. Focus on core competency World class payment processing is not a significant source of competitive advantage for Starbucks, but it is for Square. This deal allows Square to worry about payment acceptance & processing efficiency, and Starbucks to focus on product/service. Michael Porter would be proud of this deal.

Re: Jack Dorsey: Today Starbucks Signed up for Square

#149

Post by jleedev »

ry0ohki wrote: post #113
kayoone wrote: post #85

Earlier quoted context omitted.

Here in Europe (Germany) i have never seen anyone buying a coffee with a credit card. Maybe debit card, but that also is rare, its mostly cash for these small transactions. Most coffee shops dont even take any cards at all, even here in germany!

In Pittsburgh, 90% of the businesses that take Square are coffee shops for whatever reason

The first place I ever used Square was a Pittsburgh coffee shop.

Re: Jack Dorsey: Today Starbucks Signed up for Square

#150

Post by SebMortelmans »

kayoone wrote: post #85
jevinskie wrote: post #44

Earlier quoted context omitted.

"Square will process Starbucks U.S. credit and debit card transactions": Wikipedia says that Starbucks has $11.7 billion in revenue every year. I would assume that a majority of that revenue is through a card. I am not familiar with Square's revenue but I feel that this will at least double their transactions. Am I correct?

Here in Europe (Germany) i have never seen anyone buying a coffee with a credit card. Maybe debit card, but that also is rare, its mostly cash for these small transactions. Most coffee shops dont even take any cards at all, even here in germany!

Belgium, probably nobody uses his credit card to buy coffee. We only use our credit card when we have absolutely no other option :)
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